French president Hollande with no
credible planFrançois Hollande promises and
end to austerity
Article added on May 7, 2012 at 17:45 Paris time

A disastrous economic and
financial situation

There was no doubt in 2007
that
Nicolas Sarkozy was the better candidate than his opponent
Ségolène Royal. On paper, in 2012, the situation was not much different.
The socialist candidate François Hollande (*1954), incidentally the former, long-time
companion of Ségolène Royal, with whom he has four children, had no
executive experience at all. He is a no-name like Barack Obama, minus the
Messiah's charisma; Hollande has been a dull Socialist Party leader for 11
years.

But
President Sarkozy had been in power for five years already and not delivered
enough.
Furthermore, Sarkozy had been part of the previous center-right governments
as a minister. At one point, the political right had to be made
accountable of the present situation.

The consequence was a close 2012 presidential election with François
Hollande winning 51.63% of the vote, ahead of the incumbent Nicolas Sarkozy
with 48.37%. Some 46 million French voters had had the right to go to the
polls on May 6. Only 80.35% did so. 4.66% of the cast votes were blank or
invalid. That left François Hollande with roughly 18 million votes ahead of
Nicolas Sarkozy with 16.86 million votes.

The Socialist victory had only been made possible by the fact that the
candidate of the extreme-right,
Marine Le Pen, said before the second round that she would cast a
blank vote. In addition, the centrist candidate,
François Bayrou, whose supporters traditionally vote with the
center-right, said ahead of the second round that he would vote for the
socialist François Hollande. Bayrou's argument was that, on one hand,
Sarkozy had pandered too much to the extreme-right and, on the other hand,
Hollande had promised to bring a moral attitude back to the office of the
French president and to French politics in general. However, Bayrou
cautiously stated that he did not agree with Hollande's economic plans.

Anyhow, the statements by Le Pen and Bayrou were the final nail in the
coffin of Sarkozy's political career. The very volatile, ousted president
had made too many enemies in the center and right political spectrum. Those
were votes he would have needed to beat the weak, socialist candidate.

François Hollande promises and end to austerity

France's current economic and financial data as well as the country's
outlook is not very promising. One rating agency has already taken off
France's triple A rating. The country's labor market is too rigid. Red tape
is omnipresent. Strikes are frequent. France's economy is already by 57%
dominated by the state sector.

If François Hollande should implement his luminary plan to rise the tax rate
for the top earners to 75%, he will definitively kill off an already weak
growth expected to reach a meager 0.5% in 2012. France's public debt has
already reached 86% of France's GDP. To service the debt alone will cost
France's taxpayers some
€45 billion in 2012 alone.

France's unemployment rate has reached 10%. The budget deficit is estimated
to reach 4,5% of GDP in 2012. Therefore, this year again, France will
violate the famous Maastricht criteria which ask for state debt not to
exceed 60% of GDP and for the public deficit not to exceed 3% of GDP.

France is on an unsustainable path. The country needs more liberal
reforms and not more socialism. The quicker François Hollande learns that
lesson, the better for France and the EU.

Daunting economic and financial challenges lie ahead of France. François
Hollande said at his Paris victory rally that:
“Austerity can no longer be something that is inevitable.” But he has not
come up with a credible, alternative plan (yet).

François Hollande is an intelligent, down-to-earth man with an excellent
education. It is time for him to find back to common sense. Let's hope he
only pandered to the left during the campaign, fighting off a serious attack
from the far-left led by Jean-Luc Mélenchon, who managed to revive the
Communist left.

Although the French president has more ample powers than the American,
François Hollande will have to work with the French parliament to implement
his plans for France's future.

On June 10 and 17, 2012 the French parliamentary elections will take place.
This will be the next great showdown between the political left and right. Will the
French opt for a cohabitation? Awarding the Socialist's with the office of
president and the Republican right with the office of prime minister as well
as a
majority in parliament could be one power-sharing solution. Or will the left
mange a clean sweep?

Since François Hollande wants the left to succeed in the parliamentary
election, he will have to persist with his left-wing rhetoric. He can't talk
about sacrifices and labor market reforms. The French left will continue to
live in a fairy-tale world until mid-June.

The rude-awakening will come afterwards. If it will be too brutal, strikes
and an even deeper disenchantment of the general public with France's
political leaders will be the result. France is not in deep shit yet. But if
the crisis should significantly worsen again, the outcome could be
disastrous. Vive la France!